Evolution: Etihad’s New Model

Etihad is adding its seventh “equity partner”, buying a 33.3% stake of Switzerland’s Darwin Airline. Darwin joins the other six, Etihad has gathered: airberlin (29%) Air Seychelles (40%) 19.9% of Virgin Australia (19.9%) 3% of Aer Lingus (3%), Jet Airways (24%) and plans in January 2014 to acquire 49% of Air Serbia (49% from January, 2014). All of these carriers have entered into agreements to feed traffic into the Eihad international network.

Never heard of Darwin Airline? They are a Switzerland based European regional carrier. Their fleet consists of ten Saab 2000s operating from two hubs: Lugano and Geneva to 26 destinations in Italy, France, Spain, United Kingdom, Germany, Netherlands, Switzerland, and Serbia. Skytrax does not rate them but Skytrax reviewing passengers have given them a eight of ten rating.

The big difference to Etihad’s other purchases is that Darwin will be rebranded as Etihad Regional. It will fly under Etihad colours but will still display Darwin’s Swiss logo and state that it’s aircraft is “Operated by Darwin Airline”. The Etihad Guest loyalty programme will be adopted. Etihad Regional still use Darwin’s airline code (F7) however. No other other carrier that Etihad have bought has done this. Etihad’s president and CEO James Hogan said: “This is a step-change for Etihad Airways. With our new partner Darwin Airline, we are creating a unique approach to network development for global airlines.” The rebranding is still subject to regulatory approval.

Through the first half of 2014. Etihad Regional will add 21 new routes and 18 new destinations to its network. It will begin to use Zurich, Switzerland as one of its hubs. This will coincide with the launch of Etihad’s daily service from Abu Dhabi to Zurich on 1st June, 2014. At this point, Etihad Regional will have flights connecting to every European city Etihad flies to: Amsterdam,Belgrade, Düsseldorf, Geneva and Paris. Darwin will also connect to aurBerlin at Berlin and Dusseldorf allowing connectivity from regional cities to the USA.

The result is that airBerlin, Air Serbia and Etihad Regional will gain more business and Etihad picks up passengers for its network. As Hogan also said. “Global aviation is changing, and it’s becoming a network game“. It means effectively a passenger will be able to fly from Lugarno to Lucnow, India or from Melbourne, Australia to Milano, Italy on an Etihad owned craft the while way. This arrangement will challenge Lufthansa particularly who own SWISS and already have an extensive interconnected network. Darwin’s Lugano-Zurich flight is operated under contract to SWISS. It is hard to imagine Lufthansa will allow this particular arrangement to continue. Delta has lodged objections with the US Department of Transport over Etihad’s involvement with both Air Serbia and Air Seychelles. Qantas has been campaigning against the Etihad/Virgin Australia arrangement.

It also begs the question: will other companies adopt the Etihad brand. Will Virgin Australia become Etihad Australia or Etihad Pacific?